- Court
- New York Supreme Court, Appellate Division, First Department
- Case
- Samsung Electronics Co., Ltd. v. MPEG LA, L.L.C.
- Date
- June 4, 2026
- Slip Op. No.
- 2026 NY Slip Op 03518
Background
This dispute involves a complex patent-licensing agreement among licensors (AAL) administered by MPEG LA. Samsung, a terminated licensor, brought a breach of contract claim related to a 2024 amendment to the AAL. The 2024 amendment would have reduced the apportioned share of revenues to terminated licensors by 50% and re-apportioned those shares to remaining licensors.
Under the AAL’s Section 6.1(1), amendments affecting revenue allocations required two supermajority votes: (i) approval by 80% of “current Licensors,” and (ii) approval by any group of “Licensors” that collectively received 80% of royalty distributions over the preceding 12-month period. The 2024 amendment received yes votes from entities receiving only 58.6% of total royalty distributions, falling short of the 80% threshold in Section 6.1(1)(ii).
MPEG LA moved for summary judgment on renewal. Supreme Court, New York County (Melissa A. Crane, J.), granted leave to renew and, upon renewal, granted summary judgment dismissing Samsung’s breach of contract claim regarding post-amendment royalties. Samsung appealed.
Holding
The Appellate Division, First Department, unanimously modified the order by denying MPEG LA’s summary judgment motion, and otherwise affirmed. The Court held that Supreme Court properly granted leave to renew but should have adhered to its prior determination denying summary judgment.
The Court found that the 2024 amendment failed to receive the requisite supermajority under Section 6.1(1)(ii) because the term “Licensors” in that subsection includes terminated licensors like Samsung. The panel applied a key textual distinction: Section 6.1(1)(i) refers to “current Licensors,” while Section 6.1(1)(ii) refers simply to “Licensors.” The use of different terms implies different meanings, and reading “Licensors” in subsection (ii) to exclude terminated licensors would render the word “current” in subsection (i) superfluous.
The Court rejected MPEG LA’s argument that this interpretation gave terminated licensors a perpetual veto, noting that Section 6.1(1)(ii) includes a temporal limitation based on royalty distributions over the preceding 12-month period. The Court also rejected the argument that terminated licensors are no longer “Parties” under the AAL, finding that Samsung, as a signatory, remained a “Party” and therefore a “Licensor” under the agreement’s definitions.
Takeaways
This decision is a textbook application of the canon against surplusage in contract interpretation. The Court’s careful attention to the distinction between “current Licensors” and “Licensors” determined the outcome. Drafters of multi-party licensing agreements should recognize that courts will give independent meaning to each defined term and modifier. Where different subsections use different qualifiers for the same base term, courts will treat the distinction as intentional and meaningful.
The ruling also demonstrates that terminated parties to licensing agreements may retain significant governance rights, including veto power over amendments, if the agreement’s voting provisions do not explicitly exclude them from the relevant voting pool.
Why It Matters
This case has broad implications for patent pool administrators and multi-party licensing arrangements. The Court’s holding means that terminated licensors who still receive royalty distributions cannot be stripped of their voting rights simply because they have exited the pool. The 12-month look-back period in Section 6.1(1)(ii) provides a natural sunset for such rights, but during that period, terminated licensors wield significant power. Patent pool participants and their counsel should carefully evaluate voting mechanics and the treatment of terminated members when structuring or amending licensing agreements. The decision also has relevance to broader corporate governance questions about the rights of departing stakeholders in multi-party ventures.